Introduction As the title .
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What Trump is doing now is actually helping to squeeze the water out of the US economy .
Since Trump officially took office on January 20, he signed nearly 150 executive orders or memorandums on the financial market disturbances, resulting in the U.S. stock market has entered a period of adjustment, the dollar index and U.S. bond yields are significantly down, while the U.S. consumer confidence also appeared to be a certain shake Layoffs announced the number of layoffs soared to a 45-year high.
On March 6, 2025, the Federal Reserve Bank of Atlanta’s GDPNow model predicted that U.S. real GDP growth in the first quarter of 2025 would be at a seasonally adjusted annual rate of 24%, which, if true, would be the worst economic growth performance since the second quarter of 2020, and could cause the U.S. economy to fall into a technical recession with two consecutive quarters of negative GDP growth. Meanwhile, Goldman Sachs and others have also revised upwards the notion of a recession in the US economy in the next 12 months, with a corresponding downward revision of economic growth in 2025.
Of course, the above information is only one side of the story, and there are some who believe that the U.S. economy is not currently in a recession. At least for the time being, the data suggests that a recession in the U.S. is only in the realm of anticipation, and that a de facto recession will take time, so be patient.
From the expression of Trump himself and his team, a series of initiatives since he came to power to help the U.S. economy to squeeze the water, that is, the U.S. economy under the rule of Biden over the past four years is actually a false prosperity, such as its recent repeatedly put forward the U.S. economy is in a transitional period or called the transition pains and so on.
In a previous interview with CNBC, Besant said that the high growth of the U.S. economy in the past has been largely dependent on government spending and the increase in government debt, and now we’re going to have to start eroding that dependence Could we be seeing that thiseconomy that we inherited is starting to roll a bit Sure We’ve become addicted to this government spending and this government debt. Sure We ve become addicted to this government spending and there s going to be a detox period.
II On March 9, 2025, Trump, in an interview on Fox News, when asked if he expected a recession this year, said he hates to predict things like that There is a period of transition because what we I hate to predict things like that There is a period of transition because what we re doing is very big It takes a little time but I think his agenda should be great for us. The president also downplayed the stock market dropping over the past week in response to his tariffs, telling Bartiromo that the market has not been as good as it could be. telling Bartiromo the market hadn’t gone down by much and saying he can’t really watch the stock market as he implements his economic policies adding You can’t go by that you have to do what you want. go by that you have to do what s right
On March 10, 2025, Kevin Hassett, Director of the National Economic Council at the White House, said that the first quarter of the year would be a bit volatile, and that GDP would barely squeeze into positive territory, but for sure this quarter there are some blips in the data that are the result of tax cuts, and that the second quarter is expected to be a big one. But for sure this quarter there are some blips in the data is the first quarter GDP is going to squeak into the positive category and then the second quarter GDP is going to take off as everybody sees the reality of the tax cuts. sees the reality of the tax cuts The current performance of the stock market is diverging from the performance of corporations and business leaders, and the latter’s impact on the medium- and long-term direction of the economy is undoubtedly more critical we re seeing a strong divergence between animal spirits of the stock market and what we re actually seeing unfavorably in the economy, and what we re actually seeing unfavorably in the economy. we re seeing a strong divergence between animal spirits of the stock market and what we re actually seeing unfold from businesses and business leaders and the latter is obviously more meaningful than the former on what s in store for the economy in the medium to long term. store for the economy in the medium to long term.
In the author’s view, the U.S. economy has suffered from the following four main moisture points over the past period of time
1 The significant increase in government spending and government debt.
2 The investor wealth effect brought about by the strong performance of U.S. stocks has supported or stimulated U.S. consumer spending to a certain extent.
3 Russia-Ukraine war The Middle East conflict and geopolitical games have brought huge benefits to the US.
4 The strong U.S. dollar triggered the return of global capital to the United States to bring investment support.
Trump’s policy is basically also against the above four points of water, such as its government spending cuts to control government debt to squeeze out the first point of water, the weakening of the U.S. dollar and the U.S. stock market adjustment is posing a challenge to the second and fourth points of water, and the third point of water is also due to the return of Trumpism and adjustments.
Although Trump’s economic policy in intentionally or unintentionally squeeze out the water of the U.S. economy in the past, but need to recognize that this process is not smooth, such as government spending and debt reduction in the bipartisan game will still exist, such as the Russia-Ukraine war, the Middle East conflict seems to have been mitigated by the European and American game and the U.S. and other alliances to the game to replace, and so on.
Second, but the general direction, Trump’s economic policy brought about by the squeeze effect is objective, it makes the United States exception that prevailed in the past few years began to return to normal. At present, Trump and his team for this process of squeezing the water is happy to see it, but the results of its adjustment of the U.S. stock market should be in the expected.
Three U.S. stocks are the most important assets held by U.S. residents, the U.S. stock market adjustment will inevitably have an impact on the wealth effect of U.S. residents, and in turn affect U.S. demand. Therefore, from this point of view, the nature of Trump’s economic policy can be understood as the U.S. version of demand-side reform and China’s supply-side reform.
Although the U.S. stock, bond and exchange rate are significantly adjusted, but need to recognize that the U.S. economic fundamentals have not changed, which means that the demand side of the U.S. economy is only suppressed at present, the current adjustment is only a return to the historical norm. Therefore, it is too early to characterize the expected recession in the United States economy as an actual recession.
V. At present, everyone’s attention is only on China and the United States, in fact, everyone ignored the recent changes in Europe and Japan, the former significantly increased defense spending Deficit rate rose by 3 percentage points compared to the previous and the latter’s expectations of interest rate hikes are rising, which to a certain extent support the performance of the euro, the British pound and yen and other non-U.S. currencies, corresponding to the bond yields rise, on the contrary, the exchange rate of the renminbi performance is relatively more stable. Relatively stable. I think the monetary and fiscal policy dynamics in Europe and Japan will also disturb the global financial markets to a certain extent.
Six can be expected is that after helping the U.S. economy squeeze water, Trump’s economic policy logic should be the next through the tax cut bill and a substantial easing of monetary policy to boost the economy, as for whether this process is smooth we still need to wait patiently, depending on the U.S. economy to squeeze the degree of the degree of water and duration.
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